Have you adequately planned out your retirement years?

Your employees will automatically be enrolled into a workplace pension scheme. But for directors, partners and sole traders, there’s no mandatory requirement for you to set up your own pension scheme. When it comes to planning your pension, the buck stops with you.

Here are some of the main questions you’re likely to have about your retirement planning:

Why do you need a good personal pension strategy?

With a good pension scheme behind you, you’ll be able to retire and live out your plans for later life, without having any unnecessary worries about your finances.

How should your pension work?

You’ll make regular monthly contributions into your plan. This money will then be invested over time to (hopefully) create a bigger pot of money for retirement.

When you reach retirement age you’ll have a lump sum of money in your pension. It’s your decision what you then do with this money. You can; take all or some of it as cash; buy a product that gives you a guaranteed income (annuity); or invest in a fund to get a regular, adjustable income (flexi-access drawdown).

Should you choose a workplace pension or a personal pension plan?

If you don’t have any automatic pension provision, you have two main choices:

Workplace pension – you don’t have to worry about choosing the right investment plan or making regular contributions. You just enrol in the company scheme and that side is all taken care of for you.

Personal pension – you can choose the type of investments that best suit your needs and goals. You also have the option of withdrawing from the scheme at any time without incurring any penalties.

What should you consider when choosing a pension plan?

Choosing the personal pension scheme route gives you options. But there are a few key questions you need to think about before making any decisions on a provider.

1. How big will your contributions need to be? 

Your pension pot needs to supply enough money to help you maintain your desired lifestyle in retirement. That means making monthly contributions that are big enough to generate the income you want for the rest of your life.

2. What are the rules for withdrawing your money? 

Most pension schemes won’t let you draw on your funds until you’ve reached at least 55. Read the small print to know when you can and can’t access your money.

3. How are your investments managed? 

Pension providers will usually provide regular updates on your investment performance. Make sure you know how your funds are being managed, and where your investments are.

Could your pension be part of your tax planning?

Putting cash into your pension plan makes good financial sense at any point, but pension contributions are also a useful tool when it comes to your tax planning too. Any money you pay into your scheme is liable for tax relief. You get the double whammy of saving for your future and cutting your overall tax liability for personal income tax.

Do you need an independent financial adviser?

If you need advice to help you choose the right pension scheme, provider and investments, speak to an IFA.

We can help with your tax planning questions, but only an IFA or a certified pensions specialist can give you professional advice on your pension choice. We can help you look at the tax implications of contributing to a pensions scheme. We can also introduce you to the best IFAs and pensions advisers.

Contact us to talk about your pension strategy.